MUP reform to free up P230 billion in budget – DBM

MANILA, Philippines — Reforming the pension system of the military and uniformed personnel (MUP) could free up around P230 billion in next year’s appropriations that could be allocated for other programs in the social sector, the Department of Budget and Management (DBM) chief said yesterday.

“If you free up that amount, we will be able to fund more roads, more school buildings, hospitals and livelihood projects for our social sector,” Budget Secretary Amenah Pangandaman told the Kapihan sa Manila Bay media forum.

Pangandaman stressed that the current MUP pension system is non-contributory and, as such, retirement pensions and benefits are fully funded by the government through annual appropriations.

This year, the Pension and Gratuity Fund (PGF) has an allocation of P272.94 billion, almost 50 percent higher than the 2022 level of P183.94 billion.

The annual fund is meant to pay off pension and retirement gratuity and terminal leave benefits, including separation benefits and incentives.

“The intention (of the reform) is good. To let them contribute to ease up our fiscal space,” said Pangandaman, noting that the magnitude of the pension of MUP on average is at P230 billion.

At present, the economic team through the Department of Finance (DOF) is leading the dialogue and consultation with MUP services.

It has so far conducted 13 sessions with seven MUP sectors.

Given that the MUP pension system reform has yet to become a law, it remains included in the record P5.768-trillion 2024 National Expenditure Program (NEP).

“As of now, it’s in the PGF. That’s why our fiscal space remains tight,” she said. “Any measure or reform that will help ease the fiscal space for our budget to be able to fund our pressing programs is welcome news for the DBM.”

For Albay Rep. Joey Salceda, the needs of the MUP should be balanced with the sustainability of the pension fund since the country’s “fiscal sustainability is also a national security.”

“If we run out of funds to support the MUP pension system, there will be graver concerns than a mass retirement,” Salceda, chairman of the House committee on ways and means, said in a statement. – Sheila Crisostomo, Michael Punongbayan